NIA bungles VISER, hides under ICT

By Patience Saghana
The dream of the Nigerian insurance industry to hit Â Â Â N1trilion income by 2012 may just be far-fetched if frantic efforts are not stirred by insurance companies to re_activate the Vehicle Insurance Sticker (VISER) which the Nigerian Insurers Association (NIA) has bungled.
The nationâ€™s insurance industry if care is not taken may not be able to race competitively with the trend in the global market as motor insurance business around the world record high percentage of countriesâ€™ gross premium incomes. The NIA in trying to defend its failure on VISER claimed that it wanted to de_emphasise the use of paper work for electronic_insurance using Information Communication and Technology (ICT).

The nationâ€™s insurance industry is in the back seat in the global market premium income. For example, global insurance market generated a gross premium income of $3,757.7 billion in 2008.Â Â Â Of the $3,757.7 billion global premium income, motor insurance generated $478.7 billion in the same year but Nigeria with a population of over 140milliom, the countryâ€™s insurance industry generated a premium income of N164 billion ($1.093billion) in 2008, out of which Motor insurance contributed only 25 percent of the industry premium income representing N41.23 billion ($274,866.00).

In Mauritius, motor insurance is the largest class of general insurance, accounting for 45percent of total non_life premium. In South Africa, Motor insurance contributes 44 percent of gross premium income of that country while China generated premium income of 70.6 billion yuan (US$8.9 billion) from motor insurance premiums in the first eight months of this year, up 18.9 per cent on_year, according to figures from the China Insurance Regulatory Commission. Chinaâ€™s motor insurance is expected to earn a premium income of RMB 300 billion in 2012, up from RMB 140 billion at the end of 2007. This is due to increasing car ownership as with only 35 million (estimated figure) cars for a population of 1.3 billion.

Proof of insurance is made by a valid sticker which is pasted on carsâ€™ windscreens and made easy for police at the various road checkpoints and should in the case of any unfortunate incident involving the insured car. Unfortunately, most drivers regard having insurance only as a means to pass through the checkpoints with the minimum fuss from the police. Few drivers actually consider the type of cover provided by the policy they buy and simply opt for the cheapest. Indeed, it has come to light that some consumers have been buying fake insurance stickers sold on the street in and licensing offices in an attempt to reduce cost.

Hence, Nigerian insurance industry has wittingly traded its premium income especially on motor insurance to touts and fake operators who have taken the shine off insurance companies as a result of the failure of the NIA to prove itself worthy of the four years fight with the National Insurance Commission (NAICOM) over the VISER which was eventually handed over to the body two years ago.

Fake operators cart_away millions of naira year_in_year_out, monies that would have ordinarily been generated by genuine insurance companies thus leaving the sector at the mercy of the meagre premium income from motor insurance business. The failure or the delay as it were by the NIA to avail the industry of the VISER has cost the sector loss of income to genuine insurance companies; loss of revenue to the government and to NAICOM as the regulator and is causing economic loss to individual in the event of loss who can barely differentiate between fake and genuine stickers

NAICOM in January 2004 introduced VISER as part of its efforts to reduce fake motor insurance certificates rampant in the country and keep fake insurers out of the business. It was also envisaged that the VISER project would afford registered insurers the opportunity to generate more premium income which have hitherto been going to fake operators but after the initial supply, NAICOM ran into a hitch and could no longer make the stickers available to insurance companies as the contract awarded to Rocstone International Limited, a London_based security printer, for the printing of the stickers became enmeshed in controversies. Apparently disappointed with the way NAICOM handled the project, the NIA at its Governing Council meeting held on January 27, 2005 decided to withdraw its support from the commission on the production and distribution of the VISER.

NIA fought the commission tooth and nail over VISER under the argument that NAICOM lacked the statutory authority to embark on such a purely commercial venture. The association therefore advised NAICOM to concentrate on its core functions of regulating and supervising the insurance industry and hand over the production of VISER to the body.

It was during the fiend that two insurance commissioners: Otunba Oladipo Bailey left the commission in 2004 and Chief Emmanuel Chukwulozie in 2007 after which Mr Fola Daniel was appointed in August 2007. And less than a year in office, Daniel quietly handed over VISER to NIA in 2008 but the association has since muffed the spirit of VISER at the expense of insurance companies in the country thus leaving the fake operators to make huge income from the sector.
It was also on that premise that the NIA in a letter to the then Commissioner for Insurance, Okechukwu Chukwolozie signed by Mr. Ezekiel Chiejina, Director_General who traced the history of the VISER project and regretted the controversies which the project was enmeshed in, concluded that NAICOMâ€™s inability to guarantee uninterrupted supply of the sticker despite advanced payment for the product by its members companies informed its decision to withdraw support for the project.

The NIA backed its position with some facts, which included the issue of NAICOM owing some insurance companies sums of money deposited since 2004 for stickers which have not been supplied to date. â€œOwing to the absence of genuine stickers in the industry, fake stickers boom was created and the activities of fake insurance institutions heightened as printing of VISER became anybodyâ€™s business as there is no way to differentiate between fake and genuine sticker,â€ the NIA said. The association therefore directed its 94 member companies to stop patronising NAICOM on the issue.

The current insurance commissioner, Daniel, not wanting to get entangled in the jinx surrounding the production of the sticker handed it over to the NIA and ever since, nothing has been heard about VISER.